Ask Matt: Were Potbelly's woes visible earlier?

A: Potbelly was one of the sweet tasting initial public offerings of 2013. It’s giving investors a bitter taste now.

The sandwich shop with more than 300 restaurants in the U.S. dazzled investors when it first sold shares to the public in October. Shares zoomed 120% on their first day of trading from the initial price of $14 a share. But this year, the stock has lost 55% of its value, closing Thursday at $10.97. That’s a painful 22% decline from the IPO’s offering price. The stock’s woes intensified Thursday after the company told investors the second-quarter profit report would be worse than anyone expected. The company said it would earn 6 cents a share, a far cry from the 16 cents a share that analysts were forecasting, says S&P Capital IQ. And it’s not just a bad quarter that will come and go like a case of indigestion. Potbelly also warned sales at stores open at least a year would be flat or down fo the year, and earnings for the year would fall short of estimates.

Potbelly’s fundamentals didn’t give much a warning. Revenue rose 7.5% in the first quarter, which was an acceleration from the fourth quarter. The biggest tip off was the stock. Shares have been steadily falling all year. Investors should have known it was time to get out.

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.